Emirates Steel Arkan (ESA) said it is in talks with two Japanese companies to build a supply chain for “green iron” in Abu Dhabi.

The Abu Dhabi-listed company said on Monday that it has formed a partnership with ITOCHU Corporation and JFE Steel Corporation for the construction of a ferrous raw material production facility in the UAE capital.

The three companies will carry out feasibility studies at a project site, with the aim of meeting the growing demand for green steel.

Initially, high-grade iron ore will be imported into Abu Dhabi for the production of the ferrous raw material, expected to begin in the second half of 2025, then supplied to Asian companies, including JFE Steel.

Ferrous raw material will be produced through an enhanced decarbonised process using natural gas for iron ore reduction, ESA said in a statement to the Abu Dhabi Securities Exchange (ADX).

There are also provisions for using renewable energy power sources, as well as green hydrogen, for the reduction process, the company said.

Eng Saeed Ghumran Al Remeithi, Group CEO of Emirates Steel Arkan, said the collaboration with the two Japanese companies is the first of its kind in the region.

“If hydrogen reduction becomes an established technology in the production of steel, Emirates Steel Arkan will rapidly harness it in order to further reduce its carbon emissions,” he said.

Jun Inomata, COO of metals & minerals resources division of ITOCHU Corporation, said ITOCHU will be responsible for sourcing high-grade iron ore while JFE Steel will use ferrous raw material produced through the project as a steelmaking raw material.

(Writing by Imogen Lillywhite; editing by Cleofe Maceda)